The Swedish tax authority said Wednesday it has ordered Volvo Cars AB to pay about US$37.2 million in back taxes, saying it filed incorrect income statements for 2005 and 2006.
A holding company for Volvo's American owner Ford Motor Co. has also been ordered to pay about $186 million in back taxes for allegedly making exorbitant deductible interest rate payments to its parent company, said Borje Noring, a spokesman for the Swedish Tax Authorities.
Noring said Volvo sold cars to its own subsidiaries in Thailand, Taiwan, Finland and Singapore for prices that were below its own guidelines in order to avoid paying steep customs fees in the four countries.
He said the Tax Authority upgraded Volvo's income statements for the last two years by a total of 780 million kronor ($111 million), meaning the company will have to pay about 218 million kronor ($31 million) in additional taxes. It also ordered a punitive tax payment of 43 million kronor ($6.15 million), but did not plan to press criminal charges, Noring said.
Volvo spokeswoman Katarina Paulsson said the company had not yet decided whether it would appeal the decision.
Noring said Ford VHC AB _ a holding company that purchased the Swedish auto maker from AB Volvo in 1999 with loans from Ford _ had made tax deductible interest payments back to its American owner that were higher than justified between 2001 and 2005.
In total, the tax authorities are now demanding about 1.3 billion kronor ($186 million) in taxes on interest payments that were deducted in Ford VHC's income statements during those years, Noring said.